The grand bargain: Canada’s climate policy reset

Canada is rising to meet the extraordinary challenges of a new era in geopolitics and international trade. To make this country into an energy superpower while also achieving our climate goals, the federal and provincial governments are resetting their relationship on climate policy.

The vision

Clean Prosperity believes that the best way to make climate policy stick is to balance it with other urgent public policy priorities, like strengthening our economy, diversifying trade, and bringing our country together.

That’s what underpins Canada’s grand bargain. The federal government should repeal climate policies that simply aren’t working to reduce emissions. For their part, provinces should commit to reforming their carbon markets to drive tens of billions in low-carbon investment that will create jobs and prosperity for Canadians.

“Stronger carbon markets can help Canada build big projects and grow this country into a diversified low-carbon energy powerhouse,” argues Clean Prosperity President and CEO Michael Bernstein. 

Our July 2025 report Market Force explains how. For years, Clean Prosperity has advocated for carbon market reforms that can drive investment and cut emissions. We continue to advocate with federal and provincial governments to keep these objectives at the centre of the new grand bargain.

Read about how carbon market reforms can drive investment and cut emissions

Next steps

The memorandum of understanding signed by the federal and Alberta governments in November 2025 was the first major agreement of Canada’s grand bargain era. 

The federal and Alberta governments agreed to reform the province’s carbon market to increase credit prices to at least $130 a tonne. That could unlock more than $90 billion in low-carbon investment and slash over 70 megatonnes of annual emissions.

In May 2026 Ottawa and Alberta committed to offering joint carbon contracts for difference that will guarantee the future value of carbon credits for low-carbon project proponents. The contracts improve certainty about project revenues, reduce risk, and unlock capital investment. If governments uphold their commitments to strong carbon markets, the contracts wouldn’t be exercised and wouldn’t impose costs on taxpayers. 

The grand bargain could represent a major turning point for low-carbon investment and climate action across Canada. The next step is for Ottawa and Alberta to follow through on the design and implementation of an ambitious joint carbon contracts for difference program.  

Read about how the MOU could unlock $90 billion in investment

Selected media

Read more about how governments can increase certainty and encourage big investments in decarbonization